Executive Summary / Key Takeaways

• Vista Energy has undergone a transformational expansion, notably through the acquisition of a 50% stake in La Amarga Chica, solidifying its position as Argentina's largest independent oil producer and exporter.
• The company demonstrates exceptional operational efficiency, achieving significant production growth (81% year-over-year in Q2 2025) alongside substantial cost reductions, including a 10% decrease in well drilling and completion costs and the elimination of oil trucking.
• Vista's strategic investments in midstream infrastructure, such as the Oldelval Duplicar and Vaca Muerta Sur pipelines, are critical enablers for its ambitious growth targets and enhanced export capabilities.
• Financial guidance for 2025 projects robust growth, with total production forecast between 112,000 and 114,000 BOEs per day and Adjusted EBITDA between $1.5 billion and $1.6 billion, underpinned by a commitment to capital discipline and positive free cash flow from 2026 onwards.
• Leveraging its short-cycle Vaca Muerta assets, technological innovation in well construction, and a disciplined M&A strategy, Vista is well-positioned for sustained value creation despite global oil price volatility.

Setting the Scene: Vaca Muerta's Agile Leader

Vista Energy, S.A.B. de C.V. (NYSE:VIST), established in 2017, has rapidly emerged as a pivotal player in Latin America's energy landscape, with its core operations centered on the high-potential Vaca Muerta shale play in Argentina's Neuquina basin. The company's strategic focus is clear: to develop a high-return shale oil drilling inventory, emphasizing cost efficiency and lower carbon intensity production. This targeted approach has allowed Vista to carve out a significant niche, distinguishing itself from larger, more diversified competitors.

The broader industry context highlights Vaca Muerta's immense potential, often compared favorably to North American shale basins like the Permian. Global oil demand continues to show long-term strength, though the market anticipates a softer supply-demand balance in 2025, with forecast demand growth of 1 million barrels per day against a supply increase of 1.2 million barrels per day from regions including Brazil, the USA, Guyana, Canada, and Argentina itself. Within this dynamic environment, Vista's agility and specialized expertise are crucial competitive advantages.

Compared to Argentina's state-owned YPF S.A. , Vista operates with greater flexibility and a streamlined structure, allowing for potentially faster project development cycles and more efficient resource utilization. While global giants like Occidental Petroleum Corporation (OXY) and Chevron Corporation (CVX) benefit from immense scale and diversified portfolios, Vista's deep regional knowledge and focused investments in Vaca Muerta provide a qualitatively superior ability to navigate local regulatory and geological complexities. This strategic positioning, combined with a commitment to operational excellence, forms the bedrock of Vista's investment thesis.

Technological Edge and Operational Excellence

Vista's competitive moat is significantly reinforced by its technological prowess and relentless pursuit of operational efficiency in shale development. The company's core technology centers on optimizing the extraction of hydrocarbons from Vaca Muerta's complex shale formations. A key differentiator is its short-cycle capital expenditure model, where drilling and completion of a well can take approximately one month, providing exceptional flexibility to adapt to market conditions.

The tangible benefits of Vista's technological and operational focus are evident in its cost structure and well performance. The company has achieved a 10% reduction in new drilling and completion costs, bringing the cost per well down to $12.8 million. This saving of $1.4 million per well is expected to be fully reflected in Q3 2025 costs. Furthermore, Vista has successfully implemented longer lateral wells, extending from 2,800 meters to between 3,200 and 3,300 meters. While these longer laterals increase well costs from approximately $14.5 million to $16-17 million, primarily due to an increase in frac stages from 47 to 50-55, the management emphasizes that "every time that we have a chance to go a bit longer on a lateral NPV pay-off." These extended wells yield higher Estimated Ultimate Recoveries (EURs), moving from 1.5 million barrels to around 1.8 million barrels, significantly enhancing the Net Present Value (NPV) of its projects.

Innovation extends to drilling and completion techniques. Vista has adopted the use of wet sand in its operations, piloting the technology last year and now rolling it out company-wide for immediate and future savings. The introduction of a specialized technology for improved drilling efficiency in the curve section has reduced manual integration and saved approximately 16 hours per well. Additionally, the company employs a real-time frac plan and monitoring system, allowing for on-the-fly adjustments to pumping schedules from a remote operation center to optimize frac size and avoid "runaway fracs." Under the leadership of COO Matías Weissel, Vista has initiated a multi-year plan with a dedicated rig to "change the game in term of what we do in term of well contraction," signaling a continuous drive for innovation. These technological advancements directly contribute to Vista's low-cost base, superior margins, and ability to sustain aggressive growth, providing a significant competitive advantage in the Vaca Muerta play.

The Transformational Leap: La Amarga Chica Acquisition

The second quarter of 2025 marked a "transformational" period for Vista, driven by the strategic acquisition of a 50% working interest in La Amarga Chica, the second-largest oil production block in Vaca Muerta. This deal, completed via the acquisition of Petronas Argentina, had an NPV of approximately $1.3 billion, comprising $900 million in cash, a $300 million deferred cash payment, and 7.3 million Vista shares. The consolidation of La Amarga Chica, effective April 15, 2025, immediately boosted Vista's scale and operational footprint.

La Amarga Chica adds 46,000 acres in the core of Vaca Muerta, adjacent to Vista's existing Bajada del Palo Oeste block, with confirmed geological continuity. This acquisition significantly enhances Vista's inventory, adding an estimated 200 new well locations (at Vista's 50% share) and 140 million BOEs in P1 reserves (at 50% share, as of year-end 2023). The block's Q4 2024 production of 79,500 BOEs per day translated to 39,800 BOEs per day consolidated by Vista, contributing to a pro forma production of 125,000 BOE per day for that period.

The strategic rationale behind this acquisition was to "double down on Vaca Muerta," increasing exposure to short-cycle, high-return shale assets. Vista anticipates significant synergies from working with YPF S.A. (YPF), the operator of La Amarga Chica. These include optimizing well placement, sharing facilities, streamlining new well designs, and negotiating better rates for services and consumables. Management noted that while La Amarga Chica's average peak oil per well is slightly lower than Vista's operated blocks, this is attributed to different choke management strategies, and Vista's models indicate that the Estimated Ultimate Recovery (EUR) for La Amarga Chica is "as good as Bajada del Palo Oeste." This collaboration is expected to yield mutual benefits, improving performance and reducing costs across both companies' Vaca Muerta assets.

Financial Performance and Robust Growth

Vista's financial performance in Q2 2025 vividly illustrates the impact of its strategic initiatives and the La Amarga Chica acquisition. Total production surged to 118,000 BOEs per day, an impressive 81% increase year-over-year, with oil production reaching 102,000 barrels per day, up 79% year-over-year. This growth propelled total revenues to $611 million, a 54% increase over the same quarter last year. Adjusted EBITDA reached $405 million, marking a 40% year-over-year increase. The Adjusted EBITDA margin expanded by 4 percentage points sequentially, and netback remained flat despite lower oil prices, a testament to effective cost management.

Operational efficiencies played a critical role in margin improvement. The inauguration of the Oldelval Duplicar pipeline in March 2025 enabled Vista to eliminate all oil trucking as of April 1, 2025. This strategic move resulted in a substantial $41 million saving compared to Q4 2024 and a $28 million saving versus Q1 2025 in selling expenses, which decreased by 41% quarter-over-quarter. Lifting costs remained competitive at $4.7 per BOE in Q2 2025, sequentially flat, reflecting the company's continuous focus on cost control. For the full year 2024, lifting costs were $4.6 per BOE, down 10% year-over-year.

While the transformational acquisition led to a significant free cash outflow of $1.4 billion in Q2 2025, primarily due to the $842 million net upfront cash payment for Petronas Argentina, Vista's financial health remains robust. The net leverage ratio stood at a healthy 1.38x on a pro forma basis at quarter-end. Following the quarter, Vista secured three term loans totaling $500 million to address outstanding maturities in the second half of 2025 and early 2026, demonstrating proactive liquidity management. The company's Return on Average Capital Employed (ROACE) was strong at 24% in 2024, with a three-year average of 35%, underscoring its ability to generate superior returns.

Strategic Initiatives and Infrastructure Advantage

Vista's strategic initiatives are designed to sustain its growth trajectory and enhance its market position. The company has made significant investments in midstream infrastructure, which are crucial for evacuating increasing production volumes from Vaca Muerta. The Oldelval Duplicar pipeline, now fully operational, provides Vista with 31,500 barrels of oil per day of firm transportation capacity, effectively eliminating the need for costly oil trucking. This infrastructure is a direct contributor to improved margins and increased oil exports, which tripled year-over-year to 5.6 million barrels in Q2 2025.

Looking further ahead, Vista is a key partner in the Vaca Muerta Sur (VMOS) pipeline project, which is expected to be ready by mid-2027. This project, with a first-stage capacity of 550,000 barrels of oil per day, will provide Vista with an additional 50,000 barrels of oil per day of transportation, storage, and export capacity. The project's financing, a $2 billion syndicated 5-year term loan secured from five international banks, reflects strong "investor confidence in Vaca Muerta and in the old project of Vaca Muerta as well." The acquisition of Petronas Argentina also added 57,000 barrels of oil per day of field transportation capacity, including significant access to Oldelval and Vaca Muerta Norte pipelines, with over 20,000 barrels per day of spare capacity.

Vista maintains a disciplined and opportunistic approach to M&A, consistently seeking opportunities that meet a "high bar in terms of value accretion and also a strategic fit." The company's management has demonstrated a strong track record as both operators and in business development. Furthermore, Vista is committed to reducing its environmental footprint, achieving an 8.8 kg of CO2 equivalent per BOE in greenhouse gas emission intensity in 2024, a 44% reduction year-over-year. This single-digit intensity places Vista among the top 14 global oil and gas operations, supported by initiatives like increased renewable energy offtake and the first gas compression station powered by renewable energy in Latin America.

Outlook and Guidance: Accelerating Towards New Highs

Vista's updated annual guidance for 2025 reflects the significant impact of the La Amarga Chica acquisition and its accelerated growth trajectory. The company forecasts total production between 112,000 and 114,000 BOEs per day for the year, representing a projected 62% growth compared to 2024. For the second half of 2025, production is expected to be even higher, ranging from 125,000 to 128,000 BOEs per day, positioning Vista for a strong start in 2026.

Adjusted EBITDA for 2025 is forecast between $1.5 billion and $1.6 billion, implying a 41% growth over 2024. This guidance assumes a Brent oil price of $65 per barrel for the second half of the year, translating to a realized price of $60 per barrel. Management noted that a $5 per barrel change in realized oil price in the second half of 2025 would result in an $80 million change in Adjusted EBITDA. Capital expenditure for 2025 is projected at $1.2 billion, which includes new drilling and completion costs and $60 million in facility savings. Vista plans to connect 59 new wells during the year, with 34 already tied in during the first half.

The company is committed to maintaining capital discipline, forecasting neutral free cash flow for the second half of 2025, composed of a negative free cash flow in Q3 and a positive one in Q4. Looking beyond 2025, Vista anticipates continued growth and positive free cash flow from 2026 onwards, reinforcing its identity as a "growth story." The acquisition of La Amarga Chica has accelerated Vista's ambition to reach 150,000 barrels per day, a target previously set for 2030, and the company is now aiming for "new high" production levels. Vista currently possesses transportation capacity of up to 144,000 barrels of oil per day, which could expand to 200,000 barrels of oil per day with the full delivery of VMOS by mid-2027. Investors can expect a comprehensive long-term forecast at the company's Investor Day in Q4 2025.

Risks and Strategic Resilience

While Vista's outlook is compelling, investors should consider potential risks. Oil price volatility remains a key concern, as evidenced by the softer market outlook for 2025. However, Vista is well-protected by its "low cash cost base," which stands at approximately $11 per barrel (or $20 per barrel including royalties and gross taxes). This, combined with the flexibility of its short-cycle drilling and completion contracts, allows the company to rapidly adjust its CapEx burn rate. Management has demonstrated this agility during past periods of market stress, such as the COVID-19 pandemic, and has stated that if realized oil prices were to fall consistently below $55 per barrel, the company "could probably cut new well CapEx from the plan and grow less and protect our balance sheet almost immediately."

The capital control environment in Argentina presents challenges for implementing financial hedging strategies, making them "not easy to implement" and "quite expensive." Consequently, Vista operates without a formal hedging program, relying instead on its "natural hedge" derived from its low-cost production, flexible capital deployment, and the absence of long-term capital commitments. Furthermore, while the company's focus on Argentina provides regional expertise, it also exposes it to country-specific geopolitical and economic risks. However, recent regulatory changes, such as the "Bases Law," have reduced "red tape" for oil exportation, making it "much more seamless to get export volume," which benefits Vista's export-oriented strategy.

Conclusion

Vista Energy stands at a pivotal juncture, having successfully transformed its scale and market position through strategic acquisitions and relentless operational execution. The integration of La Amarga Chica has not only propelled Vista to become Argentina's largest independent oil producer and exporter but has also significantly enhanced its production capacity, reserve base, and cash flow profile. The company's commitment to technological innovation in well construction, coupled with disciplined cost management and strategic investments in midstream infrastructure, underpins its ability to deliver industry-leading growth and superior returns.

With a clear path to sustained production and Adjusted EBITDA growth in 2025, and a commitment to positive free cash flow from 2026 onwards, Vista is leveraging its Vaca Muerta assets to their full potential. The blend of an agile operating model, a low-cost structure, and a proactive approach to M&A positions Vista as a compelling investment opportunity. Despite inherent market volatility and regional complexities, Vista's strategic resilience and focus on long-term value creation make it a formidable player in the global energy landscape, poised to reach new production highs and continue its growth story.